THE Taylor Commission report on a Comprehensive System of Social Security for South Africa, in particular the recommendations on a universal state income grant, released last week, has unleashed fierce debate among economists, politicians, government, church and union leaders.
Among other things, the report calls for expansion of the scope of a social safety net, by way of a basic income grant (BIG) for all South African citizens. It cites estimates that a R100 a month grant would cost R46-billion, but also alludes to research showing that R22-billion could be clawed back through the tax system.
A left-wing academic economist, who spoke off the record, said the principle of BIG was correct, but the proposed resourcing was too meagre. ”You can’t get people out of poverty with R100 a month,” he lamented.
On the other hand, a senior corporate executive said big business lacked enthusiasm for the proposal. ”We are talking about a huge amount of money, thinly distributed, which would have little impact on wealth creation in South Africa. It’s not a productive use of scarce state resources.”
The South African Council of Churches (SACC), which through the People’s Budget helped put BIG on the national agenda, said the introduction of a grant ”as soon as possible” was a crucial part of the struggle for social and economic justice.
SACC spokesperson Joe Mdhlela said the government would have to find a way of implementing it. If it could not, the churches were willing to help.
Mdhlela’s sentiments were echoed by Congress of South African Trade Unions (Cosatu) parliamentary lobbyist Neil Coleman.
”The minister has said the government supports the idea of a BIG to relieve poverty – the issue is how to implement it,” he said. ”The Taylor commission has also argued that BIG is by far the most effective way of closing the poverty gap. The issue now is how to achieve it, and we are presently discussing the time frames proposed in the report.”
Some government ministers are sceptical, as borne out by Minister of Finance Trevor Manuel’s comment that the grant idea is ”economic populism”. Social security deputy director-general Fezile Makiwane said: ”The government feels the debate must begin in earnest. There is no way we can implement BIG as a big bang.”
Last week Minister of Social Development Zola Skweyiya queried whether South Africa had the resources or capacity for such a measure.
”As issues investigated by the [Taylor] committee are complex, the Cabinet has tasked a ministerial committee, consisting of social development, labour, health, transport and the presidency, to assess the implications of the recommendations,” he said.
The ministers would consider the implications for the fiscus, the tax regime and the government’s capacity to administer BIG, said Skweyiya. The report has been thrown open for public comment.
Coleman said Cosatu’s proposal was for a R100 a month universal grant, not subject to a means test, and administered through the tax system to avert inefficiency and corruption.
The grant would be progressively clawed back from higher income earners by the revenue service and above a certain income level recipients would pay a ”solidarity tax” that would subsidise grant payments for the poor.
”If only the poor are beneficiaries, and beneficiaries of other grants are not eligible, we estimate the annual cost at about R22-billion. With a solidarity tax, this comes down to about R15-billion,” he said.
Payments for the poor could be made into post office accounts or through the proposed smart card.
As a first step, Cosatu would support the Taylor committee’s proposal that the age limit for child grants should be extended to all children under the age of 18.
Uncharacteristically, the Democratic Alliance and Cosatu agree on BIG. The DA’s Nick Clelland-Stokes said BIG was the best means of providing a safety net and closing the poverty gap, and could be implemented and sustained.
It also agrees that the means test should be scrapped. ”This would not only release the thousands of bureaucrats who administer the means test and save the state millions to be used to improve delivery, it would also effectively cut out one of the biggest fraud opportunities in the social payment cycle.”
However, while Cosatu suggests that all South Africans should receive the BIG and that income taxes should be increased to recoup expenditure, the DA proposes that qualifying people should apply and register for the grant.
The DA proposes that for income tax purposes BIG should be multiplied by about 20 to ensure that it is unprofitable for anyone with an income in excess of R7 500 to apply for it. The Cosatu approach, the DA concludes, ”is both cumbersome and economically undesirable”.
Among other measures, the DA believes the grant can be resourced by dropping the second and third tranches of the arms procurement package.